Minimum Period of Bid (Time) – Securities Regulation

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You can grab notes on other topic from here.

The takeover bid circular must be open for at least 35 clear calendar days in order to give people time to assess, give management an opportunity to give their opinion, and give other bidders the chance/right to mount a competing bid (auction)

  1. s.98: Bid Mechanics
  2. Minimum deposit period: An offeror shall allow securities to be deposited under a formal bid for at least 35 days from the date of the bid.
  • Interpretation: May be open longer than 35 days
  1. Prohibition on Take Up: An offeror shall not take up securities deposited under a formal bid until the expiration of 35 days from the date of the bid.
  2. Legislative Goal Met Protect SHs by providing Time
  • Note: Bidders have interest in doing transaction as quickly as poss; and company and shareholders want more time (for reasons below)

Provides time for:

  1. Shareholders: to assess the merits of the bid and decide whether or not to tender shares (and can take them back w/in 35 days)
  2. Management: to make recommendations and try to maybe attract others
  3. Other Potential Bidders: To create an auction and entice a White Knight
  • To create auctions (by allowing other people to make competing bids),
  • To make sure that the company is purchased for the best price (makes market efficient, don’t want anyone to get it at a large discount, should reflect actual value as much as possible)
  • Need to find a white knight (the person you actually want to buy it)
  • In practice: company wants it to be as long as possible (so they can find higher bidders), purchaser wants it shorter to buy it at cheapest price (tensions in practice happen here)

You can grab notes on other topic from here.


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